Essay on Jose Ignacio Lopez De Arriortua Case

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Jose Ignacio Lopez de Arriortua Case General Motors is one of the world's most dominant automakers from 1931. After 1980s economic recession the main goal for automobile companies was cost reduction. Customers became more price-sensitive. Also Japanese competitors came into market with the new effective system of production. So market was highly competitive and directed toward price reduction. The case states that in 1991 GM suffered $ 4.5 billion losses and most part of the costs of manufacturing was due to purchased components. GM NA hired Lopez in order to find the way from "extraordinary" situation and reduce costs. Answers to the case questions: 1. Andrew Cox states in his article that the ideal situation for buyers is…show more content…
In many cases such cooperation could go even beyond the contract and provide creative inspirational environment. Although dominance by the buyer will force supplier to cooperate, it won't even be by its own will and the feeling of pressure is not what should be in trusting relationships. So I think it is possible to maintain both at the same time, but it will be rather strained than collaborative which is not recommended for long-term interaction. 2. "Despite the odds, Toyota and Honda have managed to replicate in an alien Western culture the same kind of supplier webs they built in Japan. Consequently, they enjoy the best supplier relations in the U.S. automobile industry…." (page 3 of the Liker & Choi article). Briefly describe the authors' explanation for why Toyota and Honda succeeded where the "Big 3" failed in terms of effective supplier relationship management. Do you agree with Liker & Choi's assessment? Please explain why or why not. Are there any barriers to prevent Ford and GM from emulating Toyota and Honda's approach to supplier relationship management? Toyota and Honda succeeded in constructing effective supplier relationships because of the methods they used for it. In article they were the following: • Understanding how suppliers work; • Giving opportunity rather than setting against each other and encouraging the

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